A Health Care Plan That’s Universal and Bipartisan

After the collapse of Republican efforts at one-party health care reform, many Democrats have embraced Senator Bernie Sanders’s Medicare for All proposal. Few liberals would object to this “single payer” plan if it could be enacted with a magic wand, but the political realities of getting it through Congress are daunting.

Could there be a way to preserve Medicare for All’s simplicity and its guarantee of universal health care access while cutting its cost and increasing its bipartisan appeal?

Universal catastrophic coverage just might be the idea that could bridge the gap. So far, the idea has gotten more attention in conservative circles, but if liberals would give it a careful look, they would find a lot to like.

The basic idea is simple. Everyone would have a policy that covered all medical expenses above a deductible amount. For those with very low incomes, the deductible would be zero. For others, routine health care would not be covered, but they would be protected against the truly unaffordable costs of chronic illnesses and severe accidents. For example, the plan would not cover the cost of a visit to a doctor’s office to make sure a bad cold is not something worse, but it would cover all costs of treatment above the deductible amount if the cold turned out to be lung cancer or a serious case of pneumonia. Ideally, a broad range of health care needs would be covered, including dental and mental health.

One appeal of universal catastrophic coverage to liberals: The annual deductible would be scaled to household income. For example, suppose the deductible is set at 10 percent of the amount by which a family’s income exceeds the Medicaid cutoff, now about $34,000 for a family of four. For a middle-class household with $80,000 in income, the deductible would be $4,600; for a family earning less than $34,000, zero; and for a wealthy family with an income of $1 million, $96,600. For larger families, deductibles could be capped at double the per-person level. The premium would be zero regardless of income.

Although conservative versions of universal catastrophic coverage typically envision coverage by private insurers, subsidized by the government, the policies could just as easily be issued by Medicare. For low-income families, the result would be identical to Senator Sanders’s plan — no premium, no deductible, no gaps in coverage.

For middle-income families, the plan would not provide first-dollar coverage, but it would be much more affordable than plans now offered on the Affordable Care Act exchanges. Today, a 40-year-old pays an average premium of $4,970 for an individual “silver” plan, according to a study by HealthPocket.com, and faces maximum out-of-pocket costs of $6,449. For a family of four, the maximum out-of-pocket cost would be $12,952, and the premium would be higher, too. That is far more than the $4,600 maximum exposure for a family earning $80,000 under the hypothetical universal catastrophic coverage formula outlined above. Subsidies under Obamacare reduce total costs for families with lower incomes, but their costs would be lower under the plan, too.

Of course, a $4,600 deductible is not trivial for a middle-class family. Some families would opt for supplemental insurance, like that now purchased by many Medicare beneficiaries, to cover costs incurred before universal catastrophic coverage kicked in. But premiums for this type of supplemental insurance would be far lower than for policies now sold on A.C.A. exchanges, because maximum claims would be capped at the deductible.

Another feature that should be especially attractive to liberals: universal catastrophic coverage would apply to everyone regardless of work arrangement. Under the current system, workers at large corporations enjoy employer-sponsored insurance, while employees of small businesses or the self-employed typically have to scrape together what coverage they can.

If employers thought it would help them attract good workers, they could offer supplemental coverage to help cover universal catastrophic coverage deductibles — although there would be no tax benefit for doing that instead of just paying higher wages. Ending the tax exclusion for employer-sponsored insurance would save the government about $235 billion per year, which would go a long way toward covering the cost of universal catastrophic coverage.

“But,” some readers may say, “why not go all the way to a single-payer system like they have in Europe?”

Part of the answer is that most health care systems are not, in fact, single payer. European health care systems include some where the governments pay medical bills directly and others where private insurers or nonprofit sickness funds play a role. Some provide first-dollar coverage, while others require deductibles and co-payments. In some countries clinics and hospitals are state-owned; in others they are private or nonprofits.

Even the Sanders plan is not true single-payer, since it allows both patients and providers to opt out if they think they can do better outside the system. Universal catastrophic coverage would bring the United States into the club of nations that provide universal, affordable health care without exactly copying any one system.

More important, what we should be asking is not whether we want single-payer health care but whether single-party health care reform will get us to universal access. The Democrats-only A.C.A. was a step forward, but one with deep technical flaws. Republican-only efforts to repeal and replace the A.C.A., had they been enacted, would have only worsened the problems of high costs and gaps in coverage.

Universal catastrophic coverage has the potential to be a compromise that could appeal to pragmatists in both parties and break the political stalemate.